7.3.1 In June 1998, the City of Edinburgh Council submitted an Outline Business Case (OBC) to the Scottish Office (now Scottish Government) in support of a bid for revenue funding for a proposal to upgrade its Schools Estate through a Public Private Partnership model under an initiative of the City of Edinburgh Council called 'Investing for Education'.
7.3.2 The OBC stated that, in many areas of Edinburgh, school communities were having to make considerable efforts to cope in less than satisfactory environments in schools that were overcrowded, unsuitable for their intended purpose, inefficiently used or suffering from serious infrastructure deficiencies.
7.3.3 As at August 2000, 32% of Edinburgh's primary schools and 35% of Edinburgh's secondary schools were operating at levels in excess of 100% occupancy whilst 43% of primary schools and 25% of secondary schools were operating at between 40% and 80% occupancy.
7.3.4 The stated principal objectives of the 'Investing for Education' initiative were to ensure that the Council's school and related buildings could both fully comply with legislative requirements and would be capable of responding to the significant list of new Government and Council educational and community-related initiatives.
7.3.5 The OBC stated that the demand of these national and local initiatives had not been matched with sufficient resources to address them. Additionally, it argued that the Council's capital budgets had been insufficient to address the backlog of repairs and maintenance in school and community buildings.
7.3.6 An independent property survey undertaken in 1998 calculated that within the following 5-year period there would be a repairs and maintenance requirement of £53m for the school estate which would still not address the need for an additional £51m to bring schools up to current building regulations standards.
7.3.7 'Investing for Education' was seen by the Council as a plan to address much more of its priority school infrastructure issues than would be possible under the constraints of traditional capital funding models. The proposed alternative funding model could attract support from the Scottish Executive under the 'Level Playing Field Support' of up to a maximum of £6.62m per annum revenue funding based on a 30-year concession period.
7.3.8 The desired outcomes of the overall proposal as stated in the Outline Business Case included:
• alleviation of accommodation pressures in key areas of the City;
• resolution of inefficiencies in the delivery of education in terms of the utilisation of facilities;
• upgrading environments that were no longer suitable for modern teaching;
• reconfiguration of provision to address the special needs of children in terms of their integration into mainstream education and the creation of Centres of Excellence; and
• contribution to the overall regeneration of deprived areas of the City.
7.3.9 In terms of affordability the financial analysis produced by the City of Edinburgh Council with the support of external advisors, used a PPP shadow financial model to establish a baseline affordability target for the Council of £12m for the Year 1 Unitary Charge. This figure was set as the initial affordability target for the bidders in the Invitation to Negotiate (ITN) process but would be subject to some revision as the process developed and additional requirements were identified.
7.3.10 The determination of this initial level of affordability assumed that the sale of surplus sites created, as a consequence of the rationalisation of the schools, could deliver a capital contribution of £15.4m towards the cost of the project. This valuation was independently verified as an appropriate professional assessment of the development value of the sites.
7.3.11 The funding by the City of Edinburgh Council of the Unitary Charge was planned to be made up from a combination of the Scottish Executive's contribution of £6.62m per annum and the transfer of existing Council annual budgets for those services which would now be provided as part of the scope of the PPP project, i.e. maintenance, cleaning, catering etc.